Cuomo Signs NYRA Reorganization Bill

Governor Cuomo gets to pick seven of the 17 board members.

New York Gov. Andrew Cuomo, as expected, today signed a new law creating a three-year takeover by the state of the embattled New York Racing Association.

When, precisely, the new state-dominated board will begin running NYRA is not entirely certain, and the governor did not announce his choices for the panel in signing the bill. The Legislature passed the bill nearly four months ago.

The only certain thing that is certain: no one has a clue what NYRA will resemble in three years when, according to the new law, the state-controlled board is supposed to sunset. Nothing would prevent the state, however, from extending that control period beyond three years.

The questions are many. Will the state move to shut down any of NYRA's three tracks? Will the state now try to devise an entirely new business model for NYRA and the state's off-track betting corporations? Will Cuomo seek to break NYRA's exclusive racetrack franchise agreement signed four years ago? And how might NYRA be affected by Cuomo's plans for a sharp expansion of casinos?

Cuomo has already sent signals, sometimes via media leaks, of his desire for vast management and operational changes at the not-for-profit racing group, which was founded in 1955 and has endured a series of controversies – bankruptcy, federal indictments and, most recently, the jacked-up takeout on exotic bets affair that cost bettors $8.5 million in overcharges.

Cuomo is finishing a fight his father, Gov. Mario Cuomo, had with NYRA a generation ago. In recent weeks, the administration has proposed a plan to sell or lease more than 100 acres of land at Belmont Park and Cuomo still hopes to get a full-scale, Las Vegas-style casino approved at Aqueduct.

"New York taxpayers and the betting public deserve a racing industry that is managed competently and does not neglect the health and safety of the horses. The NYRA Reorganization Board will restore public trust, accountability, and transparency to the racing industry in our state, so New York can continue to offer one of the most exciting, enjoyable, safe horse racing experiences in the nation," Cuomo said in signing the legislation today.

Industry sources say Cuomo has had some difficulties in picking a chairman to run the new NYRA board. And it is uncertain who, or if any, of the current NYRA board, such as longtime Cuomo family friend and advisor, Michael Del Giudice, will remain on the new panel. The current NYRA board, which is expected to meet this week, gets to name five people to the new, 17-member panel. Cuomo gets to pick seven of the board members, and also has the authority to recommend a chairperson. The two legislative leaders of the Senate and Assembly each have two selections to the new panel.

Now that the state will be in charge--and faces its own set of criticisms for potential problems--insiders say officials have been vetting potential NYRA board members like never before.

"It's going to be hard to get people they want for a non-paying job with all the scrutiny they're going to have to undergo. Under normal circumstances, nobody knew who was on the NYRA board. Now, they'll be in the spotlight," Pretlow said.

The new board does not take over until a majority of the publicly appointed members are selected. Sources have suggested names were being readied the past several weeks; the governor's office today said the names will come out in the "near future."

Once the board takes over, it is clear the new NYRA will answer very much to the Cuomo administration. For the governor, it means getting political points for reforms the new NYRA board might make. But it also means Cuomo--as the chief promoter of the state taking over a mega gambling enterprise--could face residual political effects for whatever problems might arise at NYRA in the next three years.

The takeover by the state also comes as the governor and many legislators want to dramatically expand gambling in New York. A constitutional amendment could go to voters as early as next fall permitting seven new casinos – full-blown facilities with gambling, such as table games, now only on Indian lands in New York – throughout the state.

The Cuomo administration also made clear that top NYRA managers should start cleaning out their desks. The governor, in announcing he signed the NYRA board restructuring bill, said when the new board takes over a national search will commence for a new chief executive officer and general counsel.

The current NYRA board has 25 directors; 11 of the slots were appointed by state officials.

Interestingly, the NYRA takeover by the state will also essentially leave the state monitoring itself when it comes to the operations of the three biggest Thoroughbred tracks in New York. A financial oversight board – chaired by Cuomo's chief budget advisor – that has been critical of NYRA operations in recent years remains legally in place. And NYRA will still be heavily regulated by the state Racing and Wagering Board, which next year gets rolled into a larger agency that will oversee all gambling-related activities in New York. And the Legislature has not only oversight responsibilities involving NYRA, but will likely have to deal with financial matters of what now becomes a government-run gambling venture.

"I'm hoping we get a board together so things will get back on a normal path," Pretlow said in an interview.